The disorganization of the accountancy department led to trillions of dollars worth of false adjustments being made to create an image of apparent competency and organization.

A June report from the Defense Department’s Inspector General made claims that the United States Army had made $6.5 trillion in false adjustments to its accountancy entries in 2015, with $2.8 trillion of that coming in one quarter alone. There was a huge omission of any receipts or invoices to support these numbers, suggesting that they had been made up.

Thus, the financial statements for the US Army in 2015 were “materially misstated”. The “forced” adjustments made these statements completely useless because “DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions.”

The United States Army’s finances are in such a mess that it had to make trillions of dollars of improper accounting adjustments to create an illusion that its books are balanced.

The Defense Department’s Inspector General, in a June report, said the Army made $2.8 trillion in wrongful adjustments to accounting entries in one quarter alone in 2015, and $6.5 trillion for the year. At the time, the Army could not provide receipts or invoices to support those numbers.

As a result, the Army’s financial statements for 2015 were “materially misstated,” the report concluded. The “forced” adjustments rendered the statements useless because “Department of Defense and Army managers could not rely on the data in their accounting systems when making management and resource decisions.”

This report comes off the back of a 2013 Reuters series that revealed large scale falsified accountancy reports from the Department of Defense to, again, create an illusion that the accountancy department was all in check. This has made it impossible for anyone to decipher how the Defense Department spends public taxation. This is extremely worrying, when considering the amount of money the Defense Department receives annually from the Congress annual budget. The Defense Department always receives the lion’s share of Congress’ budget, and with a total lack of any sort of transparency surrounding the accountancy department of the US Army, it is disconcerting to have a prediction of beckoning war and no idea where money is going in the Defense Department.

The recent report concentrated on the bigger of the two primary accounts of the US Army- the Army’s General Fund. This account had assets of $282.6 billion in 2015. But there is no way to know where this went, as the Army was disorganized enough to lose or not keep much of the required data, and that which was kept was unreliable or inaccurate, according to the GI.

Retired military analyst Frank Spinney asked, “Where is the money going? Nobody knows.” Spinney Worked for the Pentagon and is a vocal critic of the planning and organization of the Defense Department.

A Deeper Problem in the Defense Department

Mr. Spinney claims that the shambles of the Defense Department goes beyond simply balancing books, with both Donald Trump and Hillary Clinton calling for increased spending in the Defense Department amid fears surrounding the current global tensions.

Accurate and reliable accountancy could reveal bigger, deeper problems within the Defense Department and how it spends the public’s money. The budget for this year is $573 billion, which makes up over half of the overall annual budget from Congress.

The errors from the Army could hold potential consequences for the entire Defense Department. Congress has given September 30 as the deadline for an annual audit, and the problems generated from the Army could make it difficult for the Defense Department to meet that deadline, making for a large black spot, as every federal agency goes through these audits.

For years disclaimers have been submitted by the Inspector General, the Defense Department’s official auditor, on all military annual reports, claiming that the accounting in the Department is unreliable to the point that “the basic financial statements may have undetected misstatements that are both material and pervasive.”

The Military are Committed to Resolve the Issue

An email statement from an Army spokesperson claimed that the Army “remains committed to asserting audit readiness” and is taking the necessary measures to find the source of its problems.

Playing down the significance of the improper changes that were made in the accountancy department, the spokesperson made the claim that “Though there is a high number of adjustments, we believe the financial statement information is more accurate than implied in this report.” They did, however, confirm that the net total of the changes amounted to $62.4 billion.

Mr. Jack Armstrong who retired as a GS-15 federal employee out of our DoD OIG Indianapolis office, who was the official in charge of auditing the Army General Fund in 2010, claimed that the same changes were being made before he retired.

With a beckoning war on the horizon, it is disconcerting to imagine the real state of things in the Defense Department, and whether or not the US can even afford to defend if and when war does break out.

Author: Brendan ByrneWhile studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala.
To contact Brendan or give him an exclusive, please contact him at theflask@gmail.com